Fed’s Barr says housing hurdles go beyond rates
Fed Gov. Michael Barr said limited homebuilding, rising costs and owners’ reluctance to give up low mortgage rates add to housing affordability problems.
Federal Reserve Gov. Michael Barr said further monetary policy adjustments will likely be needed to bring inflation under control, while warning that housing affordability problems extend beyond borrowing costs.
Speaking Sept. 23 at a housing summit, Barr backed the Fed’s rate increase the previous week. As one of the Fed’s seven governors, he votes at every meeting of its rate-setting committee.
“Mortgage rates are generally lower when inflation is lower, and we are working toward that goal,” he said.
Mortgage rates are only part of the problem, Barr said. Too few homes are being built, builders are short on skilled workers and construction costs have climbed. Buyers also face higher insurance and property tax bills.
Low-rate mortgages create another obstacle: Owners may be hesitant to sell because financing their next home would cost more.
About half of outstanding mortgages carry rates of 4% or less, Barr said. In tight markets, fewer sellers can keep pressure on prices, even as higher rates discourage buyers.
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